ING Group Raises Nearly $1.2 Billion With
March 21, 2014 by Fran Matso Lysiak
AMSTERDAM – ING Group raised nearly US$1.2 billion with the sale of shares of common stock in its ING U.S. Inc. unit. With the sale, the Netherlands-based parent company no longer has a majority stake in the U.S. subsidiary.
Earlier this week, ING Group said it planned to sell about 33.5 million shares of common stock of ING U.S., representing about a 12% stake in its U.S.-based insurance, retirement and investment
subsidiary. ING Group would use the money to reduce its core debt. ING U.S. also had filed an update of its registration statement with the U.S. Securities and Exchange Commission, which covered 26.5 million shares to be offered in an underwritten public offering.
Based on the final price of US$35.23 a share for the 26.5 million shares being sold in the public offering, gross proceeds from the public offering — as well as a concurrent direct sale of about 7.3 million shares to ING U.S. — amounted to about US$1.2 billion, ING Group said in a statement. ING U.S. said the shares it bought were priced at $34.45 a share.
The sale of 33.8 million shares of common stock reduced its stake in ING U.S. to about 45% from about 57% at year-end 2013, ING Group said. This fulfills a European Commission restructuring requirement to divest at least 50% of ING U.S. before the end of this year, it said.
In 2008, ING Group received a US$13 billion bailout from the Dutch government during the global financial crisis. The restructuring plan between ING and the European Commission, as of 2010, required ING to divest its global insurance, ING Direct in the United States only, and asset-management operations by 2013 through sale, an initial public offering or a combination of those.
The Dutch financial services group previously announced its intention to divest its remaining stake in ING U.S. over time, in line with its strategy separate and divest its insurance and investmentmanagement businesses.
However, assuming deconsolidation of ING U.S., the sale of these shares would result in an estimated negative profit and loss impact of about €2 billion (US$2.8 billion) after-tax, to be booked in its first quarter results, ING Group said.
The “sale of ING U.S. common stock by ING Group marks another important milestone for ING U.S., as ING Group will cease to be our majority shareholder,” said Rodney O. Martin, Jr., chairman and chief executive officer of ING U.S. (NYSE: VOYA) in a statement.
ING Group said it granted the underwriters for the offering an option to buy up to about 4 million additional shares, which, if fully exercised, will further reduce its stake in ING U.S. to about 43%. ING U.S. said it won’t receive any proceeds from the offering.
Closing of the public offering and of the share repurchase are expected on March 25.
Last May, ING Group sold shares of ING U.S. through an IPO, and a follow-on offering in October. In January, ING U.S. said it would change its name to Voya Financial Inc. in April. However, ING U.S. previously said a rebranding period through September would follow as its Dutch parent divests some of the global businesses.
ING Group has been working to separate its insurance and banking operations. A spokeswoman for ING Group told Best’s News Service last spring that ING Bank “intends to be a strong, predominantly European bank,” with leading domestic full-service banking positions in attractive, stable home markets, and a leading commercial bank in the Benelux with a strong position in Central and Eastern Europe.
ING USA Annuity and Life Insurance Co. currently has a Best’s Financial Strength Rating of A (Excellent). The afternoon of March 21, shares of ING U.S. were trading at $36.61, down 0.25% from the previous close.
(By Fran Matso Lysiak, senior associate editor, BestWeek:
fran.lysiak@ambest.com)